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Learning, Sharing, and Teaching => Investor Alley => Topic started by: joenorm on January 03, 2019, 05:31:36 PM

Title: Solo 401K
Post by: joenorm on January 03, 2019, 05:31:36 PM

Lets say I started a small side business(legal)  that earned 20K Per year on top of a pretty full time job.

Could I contribute 100% of that into a Solo 401K and not pay taxes on any earned income?

That seems like a pretty good deal right? I'm new to all this stuff so feel to let me know if there are better ways to think about this.

thanks

Title: Re: Solo 401K
Post by: jacoavluha on January 03, 2019, 06:15:44 PM

IF you don't have any other 401k or 403b plans at your regular job that you already make contributions to. Then, you could contribute up to 100% of your first $19,000 in net self employment earnings to a solo 401k as an employee contribution.

Net self employment earnings is calculated as self employment business profit less one half self employment taxes.

If you already make contributions to a workplace retirement plan, your solo 401k contributions would be more limited.

Title: Re: Solo 401K
Post by: jacoavluha on January 03, 2019, 06:30:34 PM

I should have added. Employee contribution to the solo k could be pre-tax or Roth. If pre-tax you wouldn't pay income tax, but you would still pay self employment tax (social security and Medicare).